On March 27, 2020, the $2 trillion economic coronavirus stimulus package known as the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. The Act provides bankruptcy help for consumers and businesses. One important provision of the CARES Act is that it expands the eligibility for a Small Business Chapter 11 Bankruptcy. Now small businesses with up to $7,500,000 in debt can qualify.
The bipartisan Small Business Reorganization Act of 2019 (SBRA) only recently went into effect as of Feb. 19, 2020, creating the small business case process under Subchapter V. The purpose was “to streamline the process by which small business debtors reorganize and rehabilitate their financial affairs.” The SBRA allows a small business to elect to proceed as a “small business case,” rather than follow the traditional Chapter 11 bankruptcy process.
The new small business case process allows a small business to:
- No requirement to file a disclosure statement;
- On the Debtor can file a Chapter 11 Plan of Reorganization;
- No Quarterly fees to the US Trustee;
- No creditor’s committees.
Previously, Chapter 11 cases could increase small business expenses and impact operations. The new law aims to reduce time spent in bankruptcy:
- A trustee is appointed, but the small business remains in control of and in possession of all of its assets;
- The court holds an early case status conference (within 60 days of filing) to allow for the quick administration of the case, saving the small business time and fees;
- A reorganization plan must be filed within 90 days (the small business can be out of bankruptcy within 3 months);
- The small business can receive a discharge of its debts when its plan is confirmed.
Call our team today to discuss your debt relief options. A plan and the right team can make all of the difference. Chapter 11 allows you to continue operating your business. Increase your cash flow and renegotiate your debts with your creditors.
Our unique team of debt relief attorneys, CPAs, accountants, and professional staff make us uniquely qualified to assist small businesses through these economic changes. We offer free debt relief consultations. We have offices in Greensburg, Latrobe, and Johnstown. We have been helping individuals and businesses in Western Pennsylvania since 1985.